APITCO LTD. Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) TWO of these appeals were filed by the Assessee and remaining one by the revenue. Appeal No. ST/555/08 filed by the Assessee and Appeal No. ST 475/2008 filed by the revenue are directed against the Commissioner's order No. 15/2008. The Assessee is aggrieved by demand of service tax of over Rs. 1.9 crores for the period 2001 -2002 to 2005 -2006 confirmed against them under the proviso to Sub -Section 1 of Section 73 of the Finance Act 1994. They have also challenged the Commissioner's proposal to levy interest on tax under Section 75 of the Act. Further, they have also challenged penalty equal to tax imposed by the Commissioner under Section 78 of the Act. The Assessee has also challenged another demand of service tax amounting to over Rs. 95,00,000/ - for the period 2006 -2007, in adjudication of another show -cause notice issued under Section 73(1) of the Act. In the revenue's appeal, which is directed against the same order of the Commissioner, the prayer is to enhance the penalty on the Assessee under Section 76 of the Act. The Assessee's Appeal No. ST 432/2009 is against the order of the Commissioner demanding service tax of over Rs. 1,00,00,000/ - for the period 2007 -2008 in adjudication of a show -cause notice dated 6 -10 -2008 and seeking to levy interest on tax and imposing penalty on the Assessee.

(2.) THE show -cause notices issued for recovery of service tax from the Assessee for the period 2006 -2007 and 2007 -2008 are within the normal period whereas the show -cause notice dated 13 -6 -2006 which was issued for recovery of service tax for the period 2001 -2002 to 2005 -2006 invoked the extended period of limitation on the ground of suppression of facts.

(3.) LEARNED Counsel for the Assessee has submitted that, as an implementing agency for the governments concerned, they were just implementing welfare schemes by making use of the grants -in -aid given by the governments and therefore there was no service provider -client relationship between the Assessee and the governments. He has also submitted that no advice or consultancy or assistance of scientific or technological character was given to the governments in the execution of the aforesaid schemes/projects and therefore there was no question of payment of service tax on the grants -in -aid given by the governments. In this connection, the learned Counsel has relied on an earlier decision of this Bench in Administrative Staff College of India v. CC and C.E. : 2009 (14) S.T.R. 341 (Tri. -Bang.) wherein this Bench had occasion to consider the scope and ambit of "scientific or technical consultancy" defined under Section 65(92) of the Finance Act 1994. This Bench, in the cited case, held that an organization rendering "scientific or technical consultancy service" must have one or more disciplines of science or technology and that an organization which only undertook research activities related to any social science would not come within the ambit of "scientific or technical consultancy". It is also submitted that the civil appeal filed by the department against the Tribunal's decision was dismissed by the Apex Court vide Order dated 29 -3 -2010 in Civil Appeal No. 4285/2009 (Commissioner of Customs and Central Excise, Hyderabad v. Administrative Staff College of India). According to learned Counsel, the Tribunal's decision in Administrative Staff College case as affirmed by the Apex Court is squarely applicable to the instant case. The learned Counsel submits that, as the Assessee is not a public -funded research institution, nothing contained in the Board's instructions dated 9 -7 -2001 would be applicable to this case. This submission has been made inasmuch as the learned Commissioner relied on the said instructions of the Board. It is the further submission of the learned Counsel that the entire demand of service tax is based on balance -sheets and the profit -and -loss accounts of the company for the relevant period. The adjudicating authority has taken the "income from operations" as the taxable value for each financial year and has arrived at the amount of service tax after deducting the amount of service tax already paid by them as 'consulting engineers' for the same period. The learned Counsel has also endeavoured to make out a case against a major part of the demand of tax on the ground of limitation. He submits that nothing was suppressed by the Assessee and that all the relevant information had been passed on to the department as early as in January 2004. It is submitted that, when the departmental officers visited their premises on 19 -1 -2004, the Assessee furnished to them all the relevant facts. Subsequently, on 23 -1 -2004, they supplied all these facts in writing to the jurisdictional Assistant Commissioner. In that letter, the company categorically stated that they were not paying service tax on certain specified items of income for specified reasons. It is submitted that the factual position was reiterated in a letter dated 22 -4 -2006 addressed to the jurisdictional Superintendent of Service Tax. It is submitted that all the activities of the Assessee, which have since been held to be exigible to service tax under Section 65(105)(za) of the Act, were clearly disclosed in the above letters to the department and, therefore, there can be no allegation of suppression against them. It is, therefore, argued that a major part of the demand of duty confirmed against the Assessee in adjudication of the first show -cause -notice is time -barred as it is beyond the normal period of limitation.